“Tax Reform” Coverups
How often have you heard politicians support “tax reform”? Almost everybody in Washington wants some form of “tax reform” — so much so that the phrase itself has become a semantic coverup for carving further loopholes in the tax laws.
CONSIDER what is transpiring in Congress with the so-called Tax Reform Act of 1975 (H.R. 10612).
Earlier this year several determined members of the tax-writing House Ways and Means Committee were bent on some genuine tax reforms. Their efforts to end some of the more outrageous loopholes which have made many millionaires and corporations nearly tax-exempt were bolstered by concise staff reports of the Joint Committee on Taxation.
At first, prospects looked bright, despite the wavering positions of committee chairman Al Ullmann. Some major “tax shelters” in real estate and oil were slated for repeal. There were rumblings in the direction of curtailing foreign and export tax subsidies for U.S. corporations.
Then the corporate jets started landing at Washington National Airport. Out came top executives of large companies and down to Capitol Hill in their chauffeured, tax-deductible limousines to lobby the legislators personally. Things began to happen.
Rep. William Cotter (D-Conn.), for example, who poses as a liberal in Hartford, labored for the real estate speculators in eroding the proposed tax reform.
THE FIRST draft of H.R. 10612 would have raised $2 billion in 1976 by tightening various loopholes. After the second go-around by the committee and its hovering lobbyists, the bill was reduced to $1.3 billion in added revenues from millionaires and billionaires.
Then in a final spring the corporate welfare pleaders got a majority of the committee to reduce the bill’s 1976 revenue to a mere $745 million and secured some new windfalls for good measure.
The battleground now shifts to the floor of the House, where attempts to restore some of the original modest reforms will be made.
Once again the corporate jets will land at National Airport and the lobbyists will remind the legislators of how much campaign financing they will need next year.
Companies again will mislead their workers with the fear of losing their jobs if they don’t send postcards to their representatives in Congress objecting to any moves to end the tax subsidy for exports.
There is no way Congress is going to change the tax laws without citizen action groups throughout the country taking a part. (For guidelines on how to start such a group, write to People and Taxes, P.O. Box 14198, Washington, D.C. 20044.)
IF THE WEALTHY have money to spread around the Congress, the small taxpayers have the votes to make the legislators do in Washington what they sweet-talk about back home.
Since the small taxpayers spend about 10 weeks a year earning money to pay federal taxes, a fraction of these taxpayers, at the least, must spend some time organizing the citizenry for some taxation with representation.
True tax reform is not just being fairer to the great numbers of taxpayers who now watch the wealthy and the corporations escape so much of their tax burden. It is directed toward ending the terrible distortion and misallocation of economic resources.
The wealthy place ads in the Wall Street Journal desperately searching to purchase “true losses.” Other ads beg them to buy into “tax shelters” which insure heavy front-end losses.
A Texas oil mogul invests in a new Massachusetts apartment complex because it promises to be a big loser that will give his relatively small capital commitment large write-offs against the rest of his income. Companies go into ventures not because they believe they can serve consumers better but because of the tax advantages.
THAT’S THE KEY point — investments are made for tax purposes rather than for consumer benefits. This feeds the pressure for more tax loopholes to bail out unsound investments or to enlarge the tax bonanzas for the corporate welfare system.
Although Congress shuns fundamental questions with an intensity that the framers of the republic addressed them, basic changes in our tax laws must be contemplated before the tax system truly melds into a power to destroy both economy and-equity.
Perhaps replacing a tax on income with a tax on large wealth and a graduated tax on expenditure would enhance productive capital flow and economic justice with far less administrative burden on citizens.
The fact that these alternatives are almost never publicly discussed or treated to congressional hearings is significant.